Watch the Swiss

What makes Switzerland successful?

Scott Sumner writes,

Yglesias establishes that Switzerland is indeed a highly successful country. He also explains that this success is not due to some sort of gimmick, like secret Swiss bank accounts. The Swiss economy is extremely productive, and very little of that success relates to retail banking. 

[but] Yglesias discounts a bunch of (mostly right wing) explanations such as free markets, low taxes, decentralized government and widespread use of referenda.

Switzerland is an order of magnitude smaller than the United States. Think of the entire country as the state of Maryland. Think of each Swiss canton as a county in Maryland. And Swiss health care is administered at the canton level! It is like having Medicare and Medicaid administered by the counties in Maryland. Switzerland is two orders of magnitude more decentralized than the U.S.

The best governed polities tend to be about the size of Switzerland. Some badly governed polities are also small. The U.S. is one of the ten most populated countries. The other nine are governed so badly that you should be grateful to be here.

Scott offers this interesting speculation:

I do not believe that Americans are superior at making political decisions, but I do believe we have one other type of superiority.  We have an unusually talented extreme right tail of the talent distribution.  Our economic system and political freedom make this place relatively appealing to talented migrants like Elon Musk.  Thus while I don’t believe that Americans are more talented than citizens of places like Canada, on average, I do believe the top tenth of 1% of American talent is extremely impressive.  This might help to explain our increasing dominance of intellectual capital-intensive industries such as software, biotech, filmmaking, finance, etc.  Switzerland also does well in industries that require highly skilled individuals. 

If you give talented people the opportunity to create wealth, they will do so. If you give talented people the opportunity to extort wealth, they will do so. Don’t credit me with saying that. It’s Libertarianism 101.